Intel Stock Plummets 14% Amidst Competition and Texas Project Concerns

Intel's stock experienced a significant downturn, losing approximately 14% of its value on Wall Street over the past week. The share price closed at around $89.9 on Friday, following a 5.8% drop in a single day. Since the previous week, when it traded at about $113, the stock has shed over 20%. Its major competitor in contract chip manufacturing, Taiwan's TSMC, saw its stock decrease by about 9% in New York trading during the same period. The Philadelphia Semiconductor Index fell by approximately 11.4%, and the Nasdaq composite dropped about 4.5%. A portion of the disparity between the two manufacturers is linked to a project in Texas. In April, Intel joined "Terafab," a chip manufacturing initiative by Elon Musk's Tesla and SpaceX, with Intel's advanced 14A manufacturing process chosen as the foundation for the facility. Earlier this month, reports emerged that TSMC was exploring entry into the project, a development Musk confirmed on X, stating that discussions were underway. Intel CEO Lip-Bu Tan affirmed the partnership's continuation, while Musk added that TSMC might lease some facilities without altering the project's structure. Intel Foundry Services generated $5.8 billion in the second quarter, a 31% increase, though the majority of this revenue comes from internal Intel divisions. The market's valuation of Intel's stock this year has largely depended on the expectation of securing major external clients. Consequently, the possibility of a competitor joining a project Intel had presented as a significant achievement has rapidly impacted its stock price. Intel's stock, which began 2026 at approximately $36.9, reached a closing high of nearly $140.9 by the end of June, almost quadrupling in value. Even after the recent decline, it remains up about 143% year-to-date, significantly outperforming the 57% rise in the semiconductor index and the 12.5% increase in the Nasdaq. However, it is still about 36% below its peak. During its surge, Intel launched its new line of AI chips for data centers, aiming to capture market share from Nvidia. Last week, AMD, a long-standing competitor in processors, also saw its stock fall by about 13%. Nvidia had previously announced a $5 billion investment in Intel stock at $23.28 per share in September 2025, contingent on regulatory approval, as part of a collaboration on AI infrastructure and personal computer products. At Friday's closing price, this stake would be worth approximately $19.3 billion. In August 2025, the U.S. government purchased 433.3 million Intel shares at $20.47 per share, an investment of $8.9 billion for a 9.9% stake. At Friday's share price, this holding is valued at about $38.9 billion, more than four times its purchase price. The stock's rise also has accounting implications. In the second quarter, Intel recorded a loss of approximately $12.5 billion due to the revaluation of shares held in trust under the government agreement. This revaluation transformed a non-GAAP profit of $0.42 per share into a reported loss of $2.16 per share. By the end of September, the third quarter's close, the stock traded at around $123, down from its late June high. Second-quarter revenues surged 25% to $16.1 billion, marking the company's fastest growth in over 15 years. The data center and AI division grew 59% to $6.3 billion, while the personal computer division, still the largest revenue contributor, grew 13% to $8.9 billion. Coordinated gross margins increased by approximately 12 percentage points to 41.8%. For the third quarter, the company projected revenues between $15.8 billion and $16.8 billion, coordinated margins of 42%, and a coordinated profit of $0.38 per share, slightly lower than the second quarter. Intel's first manufacturing plant outside the U.S. opened in Malaysia in 1972. In the early 1980s, the company added assembly facilities and chip plants in Singapore and Jerusalem. Today, Intel operates a manufacturing plant in Kiryat Gat, Israel. The company's upcoming earnings report is scheduled for next Thursday after market close, with an investor conference call that evening at 11:00 PM Israel time. Following this past week's events, any statements from management regarding external factory clients and the Terafab project are likely to influence the stock more than the quarterly figures themselves. Earlier this week, other chip manufacturers, including Texas Instruments, which remained relatively stable during the semiconductor index's decline, are also scheduled to report. Last week, an explosion and fire occurred at Intel's plant in Kiryat Gat, resulting in injuries to three employees, two of them serious. The Kiryat Gat facility is one of the company's largest manufacturing sites outside the U.S. U.S. index futures are set to open tonight at 1:00 AM Israel time, and approximately three hours later, trading will commence on the Taiwan Stock Exchange, where TSMC is the most heavily weighted stock on the index.